FRBuyer: Wegmans – Shoppers Love It; Many Vendors Don’t

Discussion
Oct 15, 2012

Through a special arrangement, presented here for discussion is a summary of a current article from Frozen & Refrigerated Buyer magazine.

Wegmans is one of my favorite stores on the planet. But more than a few in the vendor community — both private label and branded — are not fond of them. They say that as an account, Wegmans is high-maintenance, too wedded to an overgrown private label program and sometimes just plain arrogant. As one vendor put it, "It’s a sensational supermarket, but a very frustrating account. They only carry national brands when they feel they have to — the Wegmans brand means everything to them."

And that was a relatively mild critic, obviously from the branded side, although I spoke with private label vendors also.

"Wegmans is an enigma, what I would call Traders Joe’s on steroids," added another branded vendor. "It is the best shopping experience for the consumer and one of the most difficult accounts to do business with as a national manufacturer. They put full support behind their private label and eliminate as much direct competition to their PL items as possible. I believe they have a model that works for them as long as national manufacturers continue to entice the consumer to try new products or new uses for current items."

The vendor noted that Wegmans offers its brand at a 10 – 20 percent discount to capture the consumer and "I believe they have as much as 50 percent private label in many categories."

The source added, "The one thing that disappoints me as a sales manager is their lack of respect for what we do to build our brand and the awareness of a category which gains them their consumers. The buying staff continues to compare their PL cost to ours and tells us we are ‘overpriced,’ even threatening to discontinue SKUs or refusing new product offers that compete with their PL. It’s all strong-arming to get manufacturers to strengthen their trade offers."

Another Wegmans vendor says that while other retailers are continually relying on the slotting dollars of new items as a revenue stream. Wegmans is willing to sacrifice slotting revenue in order to create more space in their sets for Wegmans brand products. He adds that Wegmans tends to try and dictate programs to the vendors, continually challenging them about other hi-lo retailers and their promotional price points despite the fact that Wegmans claims to be an EDLP operator.

Does Wegmans apparently adversarial relationships with many national brands hold any risks for the chain? How important are national brands to Wegmans’ shopping experience?

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17 Comments on "FRBuyer: Wegmans – Shoppers Love It; Many Vendors Don’t"


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Ian Percy
Guest
9 years 7 months ago

You hear about this ‘attitude’ on the part of many big purchasers; Wegmans, Walmart, etc., and I’ve never understood why they think it’s necessary. Kind of a “we can ruin you with the wave of a hand” attitude. Is this just good strong business positioning or is it something more Freudian?

All I know is ‘you live by the sword, you die by the sword’. What you put out comes back to you multiplied — be it good or bad.

David Biernbaum
Guest
9 years 7 months ago

I don’t fault Wegmans for implementing its business model, and if they choose to be 50% private label, that’s what makes them who they are. Wegmans aside, I think that every CPG retailer should work toward having good relationships with the manufacturers and they should also realize that brands are what make their private label products relevant to consumers. Also, all retailers should provide specialty brands, niche brands, and innovative brands to consumers, regardless of how much space they wish to give private label. Consumers will not shop stores that fail to carry what they want: the destination items!

David Livingston
Guest
9 years 7 months ago

I’m never going to second guess any of Wegmans decisions or methods. The importance of national brands to Wegmans is obvious.

Gene Hoffman
Guest
Gene Hoffman
9 years 7 months ago

Things are only worth what you make them worth. In the battle between Wegmans and national brands, it would seem that Wegmans is currently winning without too much risk. But the war continues on. Thus the present challenge is upon national brands to make themselves more essential to Wegmans marketing paradigm.

Max Goldberg
Guest
9 years 7 months ago

Let’s see, a retailer is faulted for being so popular with consumers that it can dictate some terms to suppliers. Sounds an awful lot like Walmart.

Consumers vote with their dollars, and they vote for Wegmans. Like Trader Joe’s, Wegmans is perfecting the art of private label. PL products have better margins for the retailer and save consumers money.

Wegmans sacrifices slotting dollars for private label, saving the consumer money. They are faulted by manufacturers for not playing the game. Do consumers really care about slotting fees?

Rather than criticizing Wegmans, perhaps manufacturers should look at how they are doing business. There are ways to profitably get into Wegmans and stay on the shelf. It takes more effort and creativity, but it is possible.

Bill Bittner
Guest
Bill Bittner
9 years 7 months ago
By definition, the retailer is the “man in the middle.” Their goal is to build customer loyalty (equity) by making their offering more appealing than that of the other retailers. By most accounts, Wegmans has succeeded in creating a unique shopping experience that brings demand for both their private label and the national brands. So they have earned the right to demand a lot from the vendor community. Does it hurt Wegmans to carry a limited line of national brands? Their results certainly don’t seem to indicate an issue. This also applies to their vigilance of costs. If Wegmans can obtain better costs and pass those savings on to consumers, both sides should win as the vendor experiences better sales at a lower price point. I guess the mistake would be if Wegmans kept the discount for themselves in order to promote their own private label. I have only known Wegmans from the technology side. They have always been advocates for technology standards and business processes that would make the whole industry more efficient. I… Read more »
Steve Montgomery
Guest
9 years 7 months ago

Retailers buy for their customers and sell for their suppliers. The balance between the two should definitely be tilted towards buying for their customers and it sounds like it is, at Wegmans.

That being said, there are definitely customers who want and will pay the difference for national brands. While I don’t foresee any national brands walking away from Wegmans, they want to continue to bear in mind their need to fulfill that customer segment.

John Boccuzzi, Jr.
Guest
John Boccuzzi, Jr.
9 years 7 months ago

Sounds like Wegmans has found a way to compete against other retailers. National Brands absolutely help drive innovation and Wegmans, as well as other retailers, benefit from that. More importantly consumers benefit. Wegmans continues to run their business with a focus on Private Label because customers “love” it. Why change a model that consumers love, and differentiates you from your competitors?

Tony Orlando
Guest
9 years 7 months ago

Wegmans’ success speaks for itself, and as they get bigger, so do the demands. I can give you a billion examples as to why independents continue to get the short end of the stick, on many national CPG products (basically we are ignored), but the push to get their stuff into the BIG stores is now falling on deaf ears. The relationship between major CPGs and retailers is difficult, due to lack of trust and demands made by the big stores. Maybe they should think about reestablishing some great deals with the many good voluntary co-ops, and other smaller wholesalers across the country, and maybe, just maybe realize, as a collective, we really do matter, and can move their product!!!

Tom Redd
Guest
9 years 7 months ago

Part of Wegmans’ mission statement is the “goal to be the very best at serving the needs of our customers.” They’ve been on Fortune’s “Top 100 Best Companies to Work For” and they have a cult-like customer following.

They’ve earned their customers’ loyalty over the years, and inside the company they offer associates good training and benefits resulting in very low turnover. Their business model has a heavy dose of private label and they deliver an exciting shopping experience and innovation in food retailing.

Hard to find fault their mission or the results. If anything, the Wegmans of the world will make CP companies and other food retailers better by keeping a focus on serving the needs of the customers.

Bottom line: national brands are a definite part of the mix at Wegmans, but they don’t constitute the core of the shopping experience.

Craig Sundstrom
Guest
9 years 7 months ago

“…one thing that disappoints me as a sales manager is their lack of respect for what we do to build our brand and the awareness of a category which gains them their consumers.”

Ah, ha-ha-ha…Reality check in aisle three! I am not, of course, a party to these meetings, so maybe Wegmans’ buyers do rude things like not holding doors open, but this seller needs to get a clearer picture of who is the customer in the relationship. Wegmans seems to know who THEY work for.

Robert DiPietro
Guest
9 years 7 months ago

The national brands are as important as the customer makes them. If Wegmans can keep their current customers and acquire new ones with a focus on private label than nothing changing.

The relationship has to win for the customer not the vendor or Wegmans.

Just maybe brand isn’t as important as it used to be good — quality and value will stand on their own.

Ed Dennis
Guest
Ed Dennis
9 years 7 months ago

Wegmans’ relationship with national brands is inconsequential. Their relationship with their customers is the only variable that matters. If Wegmans has chosen to place their efforts on delivering shopper satisfaction and are improving their bottom line equal to or better than competition, then they have no problems. You say this can’t be done, consumers will revolt! I don’t see any revolution going on outside of Trader Joe’s!

The fact is, “national brands” are not required. The only requirement is quality and it doesn’t take a brand to deliver quality!

Anne Bieler
Guest
Anne Bieler
9 years 7 months ago

Wegmans continually delights consumers with value and shopping experience in regional markets where others don’t do nearly as well. They understand their loyal consumers, provide the right assortments for local tastes and throw in some fun.

Some national brands will always be important to Wegmans — shoppers don’t want to go to another store to get the brands they want…and Wegmans doesn’t want that either. It’s a competitive retail marketplace and Wegmans has educated their shoppers about value.

Jerry Gelsomino
Guest
9 years 7 months ago

Relationships with venders is just as important as having a good standing with your customers. Good sourcing can make or break you. I’m surprised, even shocked if these stories are true about how they treat venders. Wegmans should read and respond positively to these statements.

Kai Clarke
Guest
9 years 7 months ago

Yes, there is an adversarial relationship at Wegmans, but that is the cost of doing business at this account. Any supplier who wants to do business with Wegmans needs to be prepared for their model, their product positioning and their emphasis on store brands. If this is not part of this supplier’s general outlook, they should not be doing business at Wegmans. It is as simple as that.

Christopher P. Ramey
Guest
9 years 7 months ago

The consumer speaks and retailers may choose to listen or to die. The retailer (regardless of whether it is Wegmans or not) represents and serves their customers. If a retailer’s demands are inconsistent with a supplier then that supplier should find other channels to market their product.

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